House Insurance Archives - David Graham Insurance Law

You may have read or heard stories about people who pay for insurance policies,

sometimes for years, only to have the insurance company deny their homeowner’s insurance claim and cancel their policy when they have a loss. So you may be asking yourself why you should buy homeowner’s insurance.

Insurance is a contract in which the insurance company, for a fee referred to as a premium, agrees to pay you for damage to your home or its contents caused by events which are insured against. The written contract is usually referred to as the “policy” and the events insured against are referred to as “risks” or “perils.” Insurance policies may be “all risk” and cover any peril not specifically excluded by the policy, or “named peril” and cover only those risks named in the policy. The purpose of having homeowner’s insurance is to protect you and your family from loss in the event that one of the perils insured against occurs. The insurance contract shifts the risk of loss from you and your family to the insurance company. Everyone benefits as long as both parties act in good faith to fulfill their duties under the policy.

For most people, their home represents their single biggest investment. To have to bear the cost of repairing or replacing their home would be a huge financial burden. When you factor into the equation the windstorms, hurricanes, sinkholes, water and mold damage that are so common here in Florida, and it is definitely risky to go without coverage. If you have a mortgage (and let’s face it, very few people are able to purchase a home without taking out a mortgage), the bank or mortgage company will require that you maintain homeowner’s insurance on the property.

If you have a mortgage and fail to purchase homeowner’s insurance, the bank or mortgage company will likely purchase insurance on the property since loan contracts usually require it. This is sometimes referred to as “force-placed” insurance. The premiums for force-placed coverage are very expensive and you get less coverage for the money than if you shop for coverage yourself. The bank or mortgage company will pass these higher premiums on to you in the form of higher monthly mortgage payments. If you fail to purchase homeowner’s insurance and the bank or mortgage company purchases “force-placed” insurance, you won’t get to choose the insurance company and/or agent that you will be dealing with if you have a loss. It is far better and more cost effective to shop for coverage yourself.

When purchasing a policy, it is best to select a company with an A+ rating with A.M. Best. Before binding coverage, make sure you know what is and is not covered. If you have questions, ask your insurance agent. And in the unfortunate event that you suffer loss or damage to your property and your insurance company won’t pay your homeowner’s insurance claim, call us at (386) 454-loss for a free no-obligation evaluation of your insurance coverage dispute.